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Hong Kong stock exchange concerned over deals made by Natural Dairy in New Zealand. Photo: Bloomberg

Hong Kong stock exchange concerned over Natural Dairy deals in New Zealand

HK stock exchange concerned over deals made by Natural Dairy in New Zealand

Natural Dairy (NZ) disclosed last night that the Hong Kong stock exchange had expressed concerns last month over the firm's transactions in New Zealand.

The firm said it had replied to the exchange, addressing most of the concerns.

"The company reserves its opinion on some of the aforementioned concerns," it said in a filing with the exchange, promising a clarification later.

In a letter to Natural Dairy on July 24, the exchange said: "The potential material breaches of the listing rules have aroused our concerns about the conduct of the responsible directors of the company. In particular, we are concerned whether those directors have properly fulfilled their fiduciary duties."

The firm seeks a resumption of trading of its shares, which has remained suspended since September 7, 2010.

In 2009, Natural Dairy agreed to acquire UBNZ Asset Holdings for NZ$500 million (HK$3.1 billion), provided that it would first acquire 22 dairy properties and assets in New Zealand.

The New Zealand Overseas Investment Office rejected Natural Dairy's attempt to acquire the 22 dairy properties and assets.

The stock exchange said Natural Dairy might have breached listing rules by proceeding with the acquisition without seeking prior shareholder consent, despite failing to fulfil the condition.

In 2011, the company acquired other assets and reduced its payment to UBNZ to NZ$100 million from NZ$500 million, again without shareholder approval, which violated listing rules, the exchange said.

Natural Dairy issued HK$2.32 billion of convertible bonds to Flying Max, a vendor of its milk products in China, when the bond issue was approved by shareholders for other purposes, the exchange alleged.

In October 2011, the Independent Commission Against Corruption accused Natural Dairy and UBNZ of bribery and money laundering.

This article appeared in the South China Morning Post print edition as: Dairy firm replies to queries of regulator
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